Eighty-two lawmakers in the lower house voted in favour of the motion to unseat Prime Minister Mariano Rajoy, 170 against and 97 abstained, prompting it to fail.
The vote had never been expected to succeed as a majority of lawmakers were against it, but it was brought to parliament by Podemos to shine the spotlight on Rajoy's ruling Popular Party (PP), which has been hit by a series of corruption scandals.
Albert Rivera, head of the centre-right Ciudadanos, which like Podemos burst onto the national political scene on the back of voter frustration with traditional parties, asked its leader Pablo Iglesias to "come back to reality."
In his speech, he said that seven of the 11 measures to fight corruption that Iglesias proposed during Tuesday's pre- vote debate were already being examined in parliament.
"Get to work instead of presenting votes of no confidence."
To which Podemos responded that its parliamentary group was the one that had registered most initiatives.
"For a time, you were able to fool people by saying you were something else, that you had come to regenerate things, but in reality, you are a crutch for the Popular Party, nothing more," said Iglesias.
The main opposition Socialists also had a dig at Podemos.
"Stop saying that this is an opportunity to unseat Rajoy, because it isn't true," said Jose Luis Abalos, parliamentary spokesman for the Socialists, pointing to the fact that Podemos knew it did not have the necessary support to see the vote through.
Still, the motion managed to once again raise the issue of corruption in Spain, where the PP has been particularly hard hit by graft scandals.
Opinion polls regularly show corruption is Spaniards' main concern after sky-high unemployment.
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